Following yesterday’s allegation that a charity was set up as a tax-avoidance scheme, Andrew Lansley warned in Parliament against allowing the matter to reflect negatively on the voluntary sector.
A Times investigation yesterday revealed that the Cup Trust had operated in a way which enabled its investors to avoid £46m in tax by reclaiming gift aid.
In Parliament the Labour and Co-op MP Barry Sheerman called for a Parliamentary debate into the voluntary sector as a whole, saying: “Does that [the report in the Times] not signify that the charitable sector is in deep trouble?”
The leader of the House, Andrew Lansley (Conservative), however would not promise to schedule the debate, saying: “There are many ways in which the government are trying to help them [charities] to succeed.
"Having read the article in the Times this morning, I would urge [Sheerman] not to try to excuse those kinds of allegations by raising the financial problems [in the charity sector]. Those are separate issues. We should not try to draw together the situation in the voluntary sector and the issue of tax avoidance."
Meanwhile the Charity Finance Group warned against a knee-jerk reaction.
Caron Bradshaw, chief executive of CFG said: “I am gravely concerned about the damage rare cases such as this can do to the reputation of the sector and to genuine philanthropists.”
She added: “It is important to reflect however that government’s anxiety on these rare cases should not lead to the vilification of genuine philanthropists or the introduction of rash measures which undermine the purpose and benefit which flow from incentives aimed at supporting charitable activity.”
Last night the Commission issued a detailed statement about its investigation into the charity, outlining the measures it took. It said it was “not comfortable with the charity’s set-up” but that independent legal advisers had said the Trust was acting within the law.
Civilsociety.co.uk has published the full statement here.
Public Accounts Committee interest
William Shawcross, chairman of the Charity Commission, could appear before the Public Accounts Committee next month to explain the regulator’s actions on the Cup Trust, The Times reported today.
Chairman of the Committee, Margaret Hodge MP, is reported as saying that there were “questions to answer about how such flagrant abuse could occur”.
The Public Accounts Committee is currently looking into the issue of tax avoidance and yesterday heard evidence from four major accountancy firms – KPMG, Deloitte, PwC and Ernst and Young.
But a spokesman for the Committee told civilsociety.co.uk this morning that no decisions had been taken about future evidence sessions on tax avoidance.